In the modern world, messaging has become the preeminent method of communication. Whether through text messages or messaging apps, it is how most people prefer to “talk” to each other.

Because of this fact, businesses and organizations have developed chatbots. Chatbots can be messaged or talked to in the same way that you would a human being.

The applications for chatbots range from basic customer services to more sophisticated data-driven and predictive scenarios—like personalized shopping suggestions.

But what is a chatbot exactly? And how does it work? And in what contexts is it used? Well, before we can answer those pertinent questions, let’s take a little look at the origins of the technology itself.

In this article, we look closely at chatbots, including:

  • Imitation Game—Artificial Intelligence
  • What is a Chatbot?
  • How does a Chatbot Work
  • Types of Chatbots
  • Human-in-the-Loop
  • Benefits to Business
  • Do Customers Approve?
What is a  Chatbot infographic

Imitation Game—Artificial Intelligence

Chatbots are built on the principles of artificial intelligence or AI. The origins of AI technology and, by extension, chatbots can be traced back to the 1950s and Alan Turing’s “Computing Machinery and Intelligence.” In this seminal paper, Turing asked the question “can machines think?”, and in doing so, gave birth to what is now known as the Turing test.

. The Turing test can be defined as an “imitation game” designed to establish whether a computer has the ability to convincingly impersonate a human to the degree that distinguishing between a program and a real person becomes near impossible.

Joseph Weizenbaum’s ELIZA was one of the first computer programs to attempt to do just that, mimic humans, and can be seen as an early example of the chatbot. 

Since then, with the technological advancements in Artificial Intelligence (AI), Machine Language (ML), Natural Language Processing (NLP), and Natural Language Understanding (NLU), these beginnings have evolved into what we see as pop-up, live, text-to-speech and on-screen chats. 

What is a Chatbot?

Put simply, a chatbot is a computer program that is capable of simulating and processing “human” conversation, whether in a written or spoken form, in what could be termed a natural language—or put differently, you communicate with a chatbot as you would a real person.

These conversations or chats are conducted on digital devices through instant messaging (IM), messaging applications, websites, and mobile apps.

Chatbots are designed and programmed to work independently, without the need for human assistance. 

How does a Chatbot Work

Depending on its intended purpose, a chatbot can provide either predefined, scripted responses or something significantly more “artificially” intelligent, using Natural Language Processing (NLP), Natural Language Understanding (NLU), and Machine learning (ML) technologies and processes.

Before continuing, let’s try to clarify some of these computer science terms used in chatbot design and operation.

Natural Language Processing (NLP)

Natural Language Processing (NLP) is a cornerstone of AI. It describes the ability of computer programs to analyze and process large amounts of data relating to the “natural” language spoken by humans. 

NLP chatbots convert text or speech into “structured” data. This data then works to select an appropriate answer. NLP includes processes such as tokenization, text classification, sentiment analysis, entity recognition, and dependency parsing.

NLP makes it possible for computers to communicate in the language of humans.

Natural Language Understanding (NLU)

Natural Language Understanding (NLU) is another branch of AI and is closely related to Natural Language Processing in that it enables human to computer interaction. While it could be said that NLP facilitates the analysis and understanding of language, NLU makes it possible to carry out a dialog with a computer. 

Consequently, NLU is an integral part of chat and voice-enabled chatbot technologies. Two core concepts in this process and its workings are “entity recognition” and “intent.” 

These processes extract words and phrases, and determine what the user is trying to accomplish, respectively.

Machine learning (ML)

Machine learning (ML) is an intrinsic part of AI, ML concentrates on using data and algorithms to mimic how humans learn and gradually improve knowledge through experience. As the name suggests, ML describes machines that are capable of learning.

Artificial Intelligence (AI)

Artificial Intelligence (AI), broadly speaking, AI is the science and the technology of creating intelligent machines and computers. This artificial intelligence imitates human intelligence so that computers can perform tasks and solve problems that would otherwise require  people. 

Types of Chatbots

Even though there is some dispute about the classification of chatbots, broadly speaking, there are three types—the simple rule-based kind, the independent, and the artificially intelligent variety. Let’s look at all three.

Rule-Based Chatbots

Rule-based or task-oriented chatbots are computer programs designed for a specific purpose or context and primarily focus on one kind of function or task.

Built with an emphasis on Natural Language Processing, task-oriented chatbots generate automated or predefined responses to specific user inquiries in as conversational a style as possible.

Because of this very structured and singular focus, rule-based chatbots are particularly suited to support and service roles, such as FAQs, questions about business hours, and conducting fairly basic transactions.

A rule-based chatbot is particularly adapted to conversational contexts which contain few variables. Basic and matter-of-fact exchanges, so to speak—it does not understand context and intent. 

Rule-based chatbots are the most common kind of chatbots that we see today. Most of us have likely interacted with this kind of chatbot at one time or another through Live Chat, e-commerce, or social media.

Intellectually Independent Chatbots

Intellectually independent chatbots utilize Machine Learning (ML) in a way that the ruled-based varieties do not.

As the name suggests, ML characterizes the computer program’s ability to learn from data, recognize patterns, segment and make decisions independently of human interference.

Intellectually independent chatbots have the capacity to isolate and understand specific keywords and phrases in order to furnish or “trigger” a response. The more they do this, the better they get.

It is worth noting that the intellectually independent chatbot could be easily conflated with the AI class of chatbots, as it shares the ability to learn along with other traits. However, for the purposes of clarity and understanding, the distinction might be seen as necessary and not an entirely artificial one.

AI Chatbots

AI chatbots incorporate a combination of NLP, NLU and ML technologies to offer a more predictive and “intelligent” approach than their basic rule-based or intellectually independent counterparts.

This variety of chatbot is often referred to as a “virtual assistant” due to its capacity for greater interactivity and personalization—as well as predictive intelligence. 

This ability to learn over time significantly increases the scope of applications—to the extent that they can be used to provide recommendations or even anticipate the user’s needs.

Contextual awareness combined with data analytics means that by studying user profiles and behavior, predictive chatbots are even capable of initiating conversations.

This technology combined with Text-to-Speech (TTS) and voice recognition application program interfaces (APIs) means that chatbots can process responses to spoken dialogue. Think Apple’s Siri, Amazon’s Alexa or Google Assistant.


As a failsafe measure, AI chatbots sometimes incorporate a Human-in-the-Loop module. 

HITL essentially facilitates the interaction of a human agent in specific, otherwise entirely automated, scenarios. These scenarios might include not reaching the required algorithmic confidence level, a gap in support, or even the arrival of a process at a predetermined point, such as a high-value sale.

These human handoffs offer the very best in user experience.

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Benefits to Business

The benefits of Chatbots to business are pretty self-evident. The equation is a straightforward one—around-the-clock automation and customer care boost operational efficiency and reduce human resources costs.

Response times in business are critical. Chatbots can resolve a great many customer queries instantly without the need for human intervention.

Moreover, chatbots are personalized, proactive and scalable to any business size. These characteristics mean that chatbots are often perceived as a “differentiator” in business terms. That is, they bring with them a unique set of benefits—that can set a business apart from its competition.

With that firmly in mind, let’s look at some typical chatbot applications..

Customer Services

Customer service is one of the key business functions where chatbots play a significant role. 

Hence, chatbots are frequently asked to perform a variety of customer service tasks. These tasks range from answering customer queries, sending notifications, and providing instant messaging to online ordering and booking services.

Because of their capacity to offer rapid 24/7 real-time assistance, as well as being able to handle multiple inquiries simultaneously, customer care chatbots are quickly growing in number. 

This frees up human agents from the chore of answering repetitive and time-consuming questions, allowing them to concentrate on other areas of productivity.

Chatbots operate in a wide variety of business sectors, ranging from retail and banking, to telecommunications and hospitality.

Social Media Chatbots or Social Bots

An area in which chatbots are particularly prevalent is social media and messaging. For the most part, social media chatbots or “social bots” are of the more basic rule-based kind. Facebook Messenger, Slack, Instagram, Telegram, and WhatsApp all use integrated chatbot technologies.

Businesses use social media and instant messaging chatbots to automate their customer service, marketing, and digital sales strategies. 

For example, chatbot call-to-action buttons (CTAs) offer an enticing alternative to the simple “buy now” button. Chatbots can also be used for “onboarding” users by describing its services through simple responses—which might, again, result in a call-to-action.

Sales & Marketing

Lead generation is a vital area for business growth. Chatbots allow for easier pre-qualification and automation of sales. In this way leads can be transferred to CRM or sales reps quickly and efficiently.

Chatbots also speed up “segmentation” allowing businesses to quickly establish a target “audience” for a particular product or service.

The fact that Chatbots can progressively learn from user interactions and are capable of sharing relevant information regarding brands, products, and services, makes them an invaluable marketing tool. 

Marketing chatbots can assist in product recommendations and personal notifications, as well as initiating productive conversations. All of which effectively boosts customer engagement.

Customer Contact

Chatbots play an increasing part in customer contact centers. Chatbots manage incoming communications and messages as well as directing customers to appropriate resources.

Chatbots are also used for onboarding, training, scheduling and a host of other in-house functions.

Internal IT

Increasing the efficiency of internal systems is another area in which chatbots are making significant headway.

Businesses are increasingly using chatbots to automate in-house information technology services. Chatbots can be used in relation to system password updates and status reports, providing information and alerts on a continuous, 24/7 basis.

Just as importantly, they can seamlessly expand the accessibility of voice and text interfaces available to employees.

Do Customers Approve?

According to research, for the most part, customers and users appreciate the services of chatbots. In fact, because of their perceived efficiencies, chatbots are steadily becoming the preferred method of connecting customers with businesses. 

This is particularly true with customer inquiries that more stigmatized call centers might have traditionally managed. 

Facilitated by messaging platforms, you could say that chatbots deliver a level of uninterrupted service and convenience that oftentimes exceeds the level provided by people.

This greater operational efficiency combined with reduced costs creates a win-win scenario for customers and businesses alike. 


Q. Why were chatbots created?

A. The digital world is transforming society. We are fast becoming a “mobile-first” culture. As messaging applications continue to grow in popularity and use, chatbots are increasingly called upon to play a part in this transformation.

Naturally conversing AI chatbots are fast becoming the preferred interface for a whole host of mobile applications. In this way, chatbots are fundamentally changing the way businesses and customers interact with each other.

Q. How do chatbots work?

A. Chatbots use Natural Language Processing (NLP), Natural Language Understanding (NLU), and Machine learning (ML) processes to enable interaction between humans and computers.

Depending on their level of sophistication, they can provide either automated scripted responses to questions or something much more predictive and artificially intelligent. Moreover, AI chatbots get even cleverer with time.

Q. Why is a chatbot important?

A. The one-click real-time nature of the world is demanding and often exceeds the level of service that can be provided by a human workforce. Customers expect to find information and services quickly and easily, regardless of the time of day. This places enormous demands on businesses and organizations alike.

Chatbots speed up these responses and free up human resources to perform other tasks, thereby significantly improving efficiency and productivity.

Q. How can a chatbot help?

A. The areas in which chatbots can help are many—they range from around-the-clock medical assistance and assistance booking airline tickets to 24/7 banking and customer services. AI chatbots further increase the range of applications by providing intelligent, informed and naturalistic responses to a whole host of interactions. . 

What’s more, with voice recognition and text-to-speech capabilities, the importance of chatbots extends far beyond the realms of business. The possibilities are limitless.


The ways we communicate with devices and, indirectly, each other are changing. Once the preserve of science fiction, Artificial Intelligence is the new frontier in this advanced form of “smart” digital communication.

Chatbots use AI to facilitate natural conversations between technology and humans. As this technology improves, how we engage with it will continue to evolve and grow. And with voice recognition, text-to-speech and the internet of things, chatbots are set to permeate every aspect of our everyday lives.

Given this unquenched demand for technology, it would seem that the age of the chatbot is here to stay.

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